Business Succession Planning

At Certus Legal Group, we adopt three primary objectives in developing a business succession plan for a client:

  • simplicity;
  • certainty of outcome; and
  • tax effectiveness.

Within these objectives, the business succession plan can be customised to meet the client’s particular needs, such as:

  • full or partial funding by insurance;
  • different exit events such as death, trauma and total and permanent disablement (TPD); and
  • different insurance ownership structures.

We use three documents to execute the business succession plan:

  • Business Succession Agreement;
  • Will; and
  • Enduring Power of Attorney.

Insurance Ownership Structures

There are four general ownership structures for business succession insurance:

  • self ownership – where the policies are owned by the life insured;
  • cross ownership – where the policies are owned by the business associates of the life insured;
  • superannuation fund ownership – where the policies are owned by the superannuation fund (typically self-managed) of the life insured; or
  • insurance trusts – where the policies are owned by a third party trustee.

It is our strongly held view that for most clients, the appropriate ownership structure is self ownership:

  • it is the simplest and least expensive structure;
  • certainty is achieved through the payment of insurance proceeds directly to the insured or the estate or family of the insured; and
  • the tax implications are clear and highly effective, especially with regards to trauma and TPD policies.

Business Succession Agreement

Put and call options are granted to each party and may be exercised upon an exit event occurring. This ensures that CGT and stamp duty liabilities arise only in the event of an option being exercised.

The purchase price may be customised to suit the client’s needs:

  • if the insurance proceeds are equal to the market value of the business interest, then a nominal amount subject to the insurance proceeds being paid;
  • if the insurance proceeds are less than the market value of the business interest, then an amount equal to the difference payable over a defined period of time; or
  • a specific amount detailed in the agreement.

Review of the Business Succession Agreement at regular intervals is essential to ensure it takes into account any change in circumstances such as:

  • new business associates;
  • a change in value of the business; or
  • a change in the insured value of any party to the agreement.

Will and Enduring Power of Attorney

For each individual party to a Business Succession Agreement, it is important to have a valid Will to ensure the smooth administration of their estate in the event of their death and subsequent carrying out of the Business Succession Agreement.

As a Will provides in death, an Enduring Power of Attorney (EPA) provides for the smooth administration of the insured’s estate in the event of trauma or TPD. It assists in providing certainty that the outcome contemplated by the Business Succession Agreement will be achieved in a cost effective and timely manner.

The Business Succession Agreement should be brought to the attention of the nominated executors of the Will and the nominated attorneys under the EPA.

A Will and EPA also provide other obvious personal benefits to the holder outside of his or her interest in the business.


We believe our fees are highly competitive and that a simple fixed fee approach provides the greatest certainty for clients. Please contact us to discuss your situation and obtain a quote.

Our Business Succession Agreement includes personal attendances upon the client at their place of work, home or their adviser’s office to take instructions, drafting and reviewing of necessary documentation, liaison with the client’s advisers and a one year review of arrangements.

Parties to a Business Succession Agreement may elect to subscribe to our annual review programme under which we review the agreement on a yearly basis to identify any required amendments as a consequence of changes in the business, the parties, taxation arrangements or relevant legislation. The parties may then choose to have the recommended changes made based on a fixed fee quote.

A Will and EPA includes personal attendances upon the client at their place of work, home or their adviser’s office to take instructions, drafting and reviewing of the documentation and indefinite storage in our safe custody facility. We offer a discount for couples having their Wills and EPAs prepared together.

For more information, please contact Certus Legal Group.